Háskóli ÍslandsUniversity of IcelandRagnarsdóttir, Anna GuðrúnRunólfsson, Birgir ÞórÁrnason, Ragnar2018-03-202018-03-202017-12-19Anna Guðrún Ragnarsdóttir, Birgir Þór Runólfsson, Ragnar Árnason. (2017). The dairy farming support system: Do the direct payments cause economic inefficiency?. Tímarit um viðskipti og efnahagsmál, 14(2), 1-26. doi:10.24122/tve.a.2017.14.2.11670-44441670-4851 (eISSN)https://hdl.handle.net/20.500.11815/648Economic distortions created by the dairy farming support system in Iceland are examined in this paper. Specifically, the impact of the direct payments component of this system is analyzed. The analysis lead to the conclusion that the form of direct payments that has been used is in many ways well-suited to improve dairy farmers' living standards without creating additional social costs in terms of resource misallocation. It follows that it would be socially wasteful, as well as economically detrimental to dairy farmers, to replace this system with an economically less efficient way of providing them with the same amount of financial support.1-26eninfo:eu-repo/semantics/openAccessDairy quotasSubsidies in agricultureMjólkurbúLandbúnaðurStyrkirHagfræðiinfo:eu-repo/semantics/articleResearch in applied business and economicsTímarit um viðskipti og efnahagsmál10.24122/tve.a.2017.14.2.1